On the Measurement of Inequality
TL;DR: In this paper, the problem of comparing two frequency distributions f(u) of an attribute y which for convenience I shall refer to as income is defined as a risk in the theory of decision-making under uncertainty.
About: This article is published in Journal of Economic Theory.The article was published on 1970-09-01. It has received 5002 citations till now. The article focuses on the topics: Income inequality metrics & Income distribution.
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TL;DR: In this paper, a simple method for deriving Gini coefficients that makes full use of the detail from individual records is presented, and compared with measures based on grouped data, showing that the downward bias from grouped data is small as a percentage of inequality, but rises with the degree of inequality.
247 citations
TL;DR: This study investigates network indicators (betweenness centrality, unevenness indicators, and more recently proposed Rao–Stirling measures for “interdisciplinarity,” which performs better than the Gini coefficient but is sensitive to size.
246 citations
Cites methods from "On the Measurement of Inequality"
...the research question. We used the full matrix; in our case the main diagonal values are always set to zero. 6 Herfindahl-Hirschman index (in economics). The Gini coefficient is akin to this measure (Atkinson, 1970; Stirling, 2007, at p. 709) and has the advantage of having been widely used in bibliometrics (e.g., Bornmann et al., 2008; Burrell, 1991; Cole et al., 1978; Danell, 2000; Frame et al., 1977; Persson...
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...The Gini coefficient is akin to this measure (Atkinson, 1970; Stirling, 2007, at p. 709) and has the advantage of having been widely used in bibliometrics (e.g., Bornmann et al., 2008; Burrell, 1991; Cole et al., 1978; Danell, 2000; Frame et al., 1977; Persson & Melin, 1996; Rousseau, 1992, 2001;…...
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TL;DR: In this article, the main concerns of the paper are the problems of estimating labour supply functions for use in models of optimum income taxation and the calculation of the effect on the optimum linear tax rate of varying the elasticity of substitution, e, between leisure and goods from 0 to 1 Backward sloping supply curves are commonly observed and they imply e e = 04 Optimum marginal rates decrease with e when taxation is purely redistributive but may be nonmonotonic if positive revenue is to be raised.
246 citations
Cites background from "On the Measurement of Inequality"
...Output is the obvious measure of welfare here since the utility function is linear in consumption and the Atkinson (1970) equally-distributed-equivalent (EDE) measure is equal to output itself....
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TL;DR: This paper used the extended Gini inequality index to examine the sensitivity of measurements of impacts of migrant remittances on the distribution of household income by size to different value judgements when measuring inequality.
245 citations
TL;DR: In this article, the authors give an overview of the relevance of distribution effects and equity, and social exclusion for accessibility, based on the literature, and conclude that CBA is not suitable for evaluating social exclusion policies.
Abstract: Ex ante evaluations of transport policy options (including infrastructure plans) are generally based on cost-benefit analyses (CBA). Accessibility changes are included in such analyses indirectly, via a utilitarian perspective. But accessibility is broader than is assumed by this perspective and also incorporates equity and related distribution effects as well as social exclusion. This paper aims to give an overview of the relevance of distribution effects and equity, and social exclusion for accessibility, based on the literature. The most important conclusions of our paper is that the two subjects are poorly addressed in transport appraisal in general, and in CBA in particular. Additional ethical theories could add value to the utilitarian perspective, egalitarian theories being a major competitor. Equity analysis is however complex because there are several types of equity, various ways to categorize people for equity analysis, numerous impacts to consider, and various ways of measuring these impacts. And such analysis requires normative judgements, in addition to simply presenting distribution effects. Several options are available to express distribution effects. Important choices to be made if such effects need to be reported relate to the unit of comparison (e.g. the household versus the individual), the indicator to be used, and the value of each unit to be compared (e.g. accessibility) for all units of comparison (e.g. households). We also conclude that CBA is not suitable for evaluating social exclusion policies. Based on this overview we propose an agenda for potential future research in the area of ethics and accessibility.
244 citations
Cites background from "On the Measurement of Inequality"
...Rietveld et al. further discuss the use of the Gini index (or alternatives like the Theil or Atkinson index – see Theil, 1967; Atkinson, 1970) in a welfare function....
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References
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TL;DR: In this article, a measure of risk aversion in the small, the risk premium or insurance premium for an arbitrary risk, and a natural concept of decreasing risk aversion are discussed and related to one another.
Abstract: This paper concerns utility functions for money. A measure of risk aversion in the small, the risk premium or insurance premium for an arbitrary risk, and a natural concept of decreasing risk aversion are discussed and related to one another. Risks are also considered as a proportion of total assets.
5,207 citations
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"On the Measurement of Inequality" refers background in this paper
...3 See Rothschild and Stiglitz [13], Hadar and Russell [ 5 ], and Hanoch and Levy [6]....
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1,738 citations
"On the Measurement of Inequality" refers methods in this paper
...Then by applying the results of Pratt [l 11, Arrow [ 2 ], and others, we can see that this requirement (which may be referred to as constant (relative) inequality-aversion) implies that U(y) has the form...
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1,544 citations
TL;DR: In this paper, an analysis of the first step of the decision-making process of an individual decision maker among alternative risky ventures is presented, in terms of a single dimension such as money, both for the utility functions and for the probability distributions.
Abstract: Publisher Summary The choice of an individual decision maker among alternative risky ventures may be regarded as a two-step procedure. The decision maker chooses an efficient set among all available portfolios, independently of his tastes or preferences. Then, the decision maker applies individual preferences to this set to choose the desired portfolio. The subject of this chapter is the analysis of the first step. It deals with optimal selection rules that minimize the efficient set by discarding any portfolio that is inefficient in the sense that it is inferior to a member of the efficient set, from point of view of each and every individual, when all individuals' utility functions are assumed to be of a given general class of admissible functions. The analysis presented in the chapter is carried out in terms of a single dimension such as money, both for the utility functions and for the probability distributions. However, the results may easily be extended, with minor changes in the theorems and the proofs, to the multivariate case. The chapter explains a necessary and sufficient condition for efficiency, when no further restrictions are imposed on the utility functions. It presents proofs of the optimal efficiency criterion in the presence of general risk aversion, that is, for concave utility functions.
1,160 citations